Fed Rate Cuts Incoming: Why Analysts Doubt Bitcoin’s Next Rally

Bitcoin (BTC) is trading tightly around $111,000 as markets await the Federal Reserve’s September 17 policy decision, where a rate cut is widely expected. Despite weaker U.S. jobs data, which typically boosts risk assets, Bitcoin’s price has struggled to break higher.

As of early Monday, Bitcoin was up 0.56% in 24 hours, trading at $111,800. The muted price action came after August’s nonfarm payrolls showed just 22,000 jobs added, far below expectations of 75,000.

The disappointing report reinforced expectations for monetary easing, with the CME FedWatch Tool showing a 100% probability of a September cut and even a 10% chance of a larger 50-basis-point reduction.

Analysts Split on Bitcoin (BTC) Outlook

Rachael Lucas, an analyst at BTC Markets, noted that while dovish Fed expectations usually support Bitcoin, the effect may already be priced in. “Institutional desks are taking profits while ETF flows remain flat, capping momentum for now,” she said.

Kronos Research CIO Vincent Liu added that a rate cut may not necessarily fuel a rally. “A cut signals economic weakness. Without stronger ETF inflows or liquidity expansion, $120K remains a tough barrier,” he explained.

ETF flows have indeed weakened. Bitcoin and Ethereum funds saw lighter inflows in early September compared to record highs in July and August, signaling a cooling of institutional demand.

For now, $110,000 is the critical support zone. Lucas believes that resistance at $113,400, $115,400, and $117,100, levels that must be cleared for Bitcoin to retest the $120K mark.

On-chain signals, such as record-high stablecoin supply and declining exchange balances, suggest potential firepower for a rally. Off-chain factors, including regulatory updates and ETF demand, will also shape sentiment.

This week’s inflation reports (PPI and CPI) could prove pivotal. Softer-than-expected data may strengthen the case for multiple rate cuts this year, while hotter readings could stall Bitcoin further.

With Fed policy, inflation trends, and ETF flows all in focus, Bitcoin faces a decisive moment. Whether it smashes through resistance or remains stuck below $120K will depend less on the Fed alone and more on whether fresh liquidity enters the market.

Cover image from ChatGPT, BTCUSD chart from Tradingview